Banks and energy providers will have to come together to share the burden of soaring energy prices.
That’s the suggestion from the Social Market Foundation which suggests that energy providers and the government should buy assets as collateral to back a financing facility to support energy companies struggling to stay afloat.
According to the proposal, this guarantee would encourage banks to offer long-term loans to help energy companies survive.
The think tank proposes that loans from the facility be in place for up to 30 years, giving energy suppliers decades to recoup their losses through slightly higher household bills.
The energy price cap will rise to £3,549 from October 1 – experts have predicted energy bills could top £5,000 next year.
Michael Johnson, an analyst for the Social Market Foundation and former investment banker, said: “These proposals build on the sensible suggestion from energy providers to freeze the energy price cap and create a financing facility.
“Inspiration is drawn from an important precedent, the highly successful Brady Plan, executed in the 1980s to help resolve a sovereign debt crisis. Today’s energy cost challenge is proportional to its magnitude and the time to resolution required. »